Timid Budget

Timid
Budget: No tax cuts for business; no surprises from
workplace savings

Today’s Budget fails to present a longer
term vision for sustaining New Zealand’s economic
development, and certainly no tax cuts for business are
anywhere in evidence.

However Government has taken into
account the issues expressed over its workplace savings
scheme - Kiwi Saver scheme.

Considering its election year
the Budget appears to have been oversold, said the chief
executive of the Employers & Manufacturers Association
(Northern), Alasdair Thompson.

“Fixing business tax
anomalies and selling them as tax cuts is disappointing,” Mr
Thompson said.

“The Kiwi Saver scheme, though helpful in a
humble sort of way, is no great leap forward.

“It was
important people would be able to opt out since many lower
paid people are far better paying off their credit cards and
mortgages than saving for low returns.

“Employers will be
pleased too they are not expected to choose a savings scheme
for their employees, that they choose their own, that the
IRD will administer it, and that sincere efforts have gone
into minimizing its compliance costs.

“But the scheme will
nonetheless bring with it extra compliance costs for
business, though minor compared to the weight of the
upcoming carbon tax.

“For Dr Cullen to state the carbon
tax income will be used to offset his timid moves to reduce
FBT and accelerate depreciation on some plant and equipment
raises questions over the calibre of the advice he has been
receiving.

“Allowing faster depreciation is no tax cut for
business; it only remedies a situation where current
depreciation rates do not reflect the write off over an
asset’s economic life. Faster depreciation merely changes
the timing when tax is paid, meaning no overall tax
cut.

“Likewise, the reduction of FBT also only corrects an
anomaly. It merely recognizes the cost of car ownership has
been reducing.

“The Budget’s tax measures appear to have
been prepared for an economy at the height of its growth
performance, not the one now showing signs of a rapid drop
in it growth rate.

“The moves to address ‘bracket creep’
are equally timid; most of us won’t lose sleep figuring out
what to do with an extra $8 a week in 2008 – they should
have at least have been introduced this year.

“Australians
will be laughing. With this Budget in another year or so
today’s exodus of 330 Kiwis crossing the Tasman each week
will look small as we educate ever increasing numbers to
enrich their
economy.”

“The BPS and the Treasury’s Half Year Economic and Fiscal Update show we can deliver our promises while running sustainable surpluses and paying down debt...

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